How this tiny county in Texas became the richest in America
Miriam Rozen cnbc.com May 22,2017
When the residents of sleepy, rural McMullen County, Texas, found out that they officially lived in the richest county in America, "we were shocked," recalls Kimberly Kay Kreider-Dusek, the only lawyer in the area. She serves as the county attorney, prosecuting misdemeanors and advising county commissioners on legal matters.
McMullen County, population: 804, one of the least populous counties in the state, lies southeast of San Antonio. According to Internal Revenue Service numbers crunched by Syracuse University researchers, its population's average adjusted gross income — at $303,717 — now ranks as the highest in the nation.
It's not as if the cattle ranchers and others in McMullen didn't already recognize that landowners "were making nice amounts of money" from oil and gas royalties, and that welders at drilling sites were pulling in six-figure salaries, says Kreider-Dusek. Still, they hadn't realized that they had officially surpassed more famously affluent areas like Teton, Wyo., and Fairfield, Conn.
And, for the most part, what residents have chosen to spend their newfound riches on isn't just surprising, it's exemplary.
How McMullen struck gold
McMullen's wealth comes thanks to the controversial practice of oil and gas fracking, which is prohibited in a couple of states and limited in others but is welcome in Texas. The county is home to the U.S.'s most productive shale gas deposit.
Decades earlier, oil and gas companies had determined that the extraction costs were too high for the region's deposits. But in recent years, fracking technology changed all that, and McMullen's economy boomed. It has continued to grow even as energy prices sag.
"[Fracking] has increased our employment rate," Kreider-Dusek says.
It has come at something of a cost, though. It increased the crime rate, which is now up to 200 misdemeanors per year, and the number of cars roaring through. In fact, most of the misdemeanors are related to traffic incidents. Thanks to what Sheriff Emmett L. Shelton described to local journalist Ben Tinsley as his office's "extremely vigorous enforcement" of traffic violations, the sparsely populated county has a disproportionately high incarceration rate: In 2014, it was the second-highest in all of Texas.
That's despite the fact that, Tinsley reports, the county doesn't even have a jail. It ships offenders over to nearby Live Oak County.
And the relations between McMullen County residents and the oil and gas companies responsible for their wealth, and for their traffic problems, have soured on occasion. A dispute recently arose between residents and a drilling company that wanted to put a landfill near a county watershed, possibly risking contamination of the water supply. The conflict may lead to a hearing before the Texas Railroad Commission, which regulates oil and gas activities in the state.
Opponents of fracking point out that the process can negatively affect local water supply, and in 2016, the EPA formally agreed and issued a warning about contamination. Kreider-Dusek is working with big-city Austin lawyers to help chart the county's strategy.
But the financial returns are undeniable.
Bulging property tax revenues from rising assessments, which will total $2 billion this year, Kreider-Dusek says, have allowed county officials to add three traffic lights. Previously there were none.
The county has also used proceeds to do more for needy residents. It has created a nonprofit to offer low-interest loans, expanded a food-assistance program for the elderly and opened a new medical clinic. Before, residents had to drive 30 miles to see a physician. Now a doctor comes by weekly.
The local school district — which serves roughly 250 students, 39 percent of them minorities and 25 percent of them economically disadvantaged — has gotten more resources too, and it now boasts a 100 percent graduation rate.
Even dead McMullen County residents can take advantage of the windfall: Residents have expanded efforts to fix and clean up headstones in Hill Top Cemetery, Kreider-Dusek says.
The richest little county in Texas
Overall, residents report that they are satisfied, and most of them haven't changed too much about the way they live.
Although Kreider-Dusek misses the cattle that used to graze on her family's ranch, she likes the fracking royalties, which have allowed her to scale back her law practice and take on the government work. "I can afford to take a public service job," she says. The money also lets her keep an apartment in nearby San Antonio and a condo in Port Aransas on the Gulf of Mexico.
For most landowners in McMullen, fracking-related royalties come to at least double their day-job salaries, she says.
And locals without ranches share in the fracking wealth. Esther Garza is a 50-year-old resident with her "own little piece of land" in town, though there are no gas deposits there. Still, fracking, for her, has meant consistent employment. She works at Wheelers Mercantile, an eatery next door to a gas station in the center of Tilden, the town that serves as the county seat.
"I'm comfortable with what I make," says Garza. The jobs her employer offers are well-paid and reliable enough that people from other counties drive to McMullen to take them, Garza says. And prices in town remain moderate. On Wheelers' menu, chicken fried steak on a bun costs $5.99.
The newfound wealth has led to no excessive spending splurges among residents, as far as Garza can tell. "There's nobody really going crazy. They might be doing repairs to their home or something," she says.
Some of the ranchers with royalty checks landing in their bank accounts on a regular basis have built extra structures on their land so adult children can move home and start families, she says.
All and all, residents say, the wealth certainly has helped more than it has hurt. "We don't have any cattle anymore. But we still have lots wide, open space and we can still see the stars," Kreider-Dusek says.